<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-5464
(LOGO) MASSACHUSETTS ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
MASSACHUSETTS 04-1988940
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
Registrant's telephone number, including area code
(508-389-2000)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Common stock, par value $25 per share, authorized and
outstanding: 2,398,111 shares at June 30, 1998.
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
MASSACHUSETTS ELECTRIC COMPANY
Statements of Income
Periods Ended June 30
(Unaudited)
<CAPTION>
Quarter Six Months
-------- ----------
1998 1997 1998 1997
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $361,889 $369,542 $758,603 $775,060
-------- -------- -------- --------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 227,683 264,492 511,265 559,692
Other operation 76,216 49,534 126,998 98,080
Maintenance 8,596 8,880 17,348 16,304
Depreciation 16,441 12,438 30,694 25,076
Taxes, other than income taxes 7,989 8,041 16,938 16,914
Income taxes 6,476 6,460 14,029 15,056
-------- -------- -------- --------
Total operating expenses 343,401 349,845 717,272 731,122
-------- -------- -------- --------
Operating income 18,488 19,697 41,331 43,938
Other income (expense), net (449) (211) (3,327) (2,107)
-------- -------- -------- --------
Operating and other income 18,039 19,486 38,004 41,831
-------- -------- -------- --------
Interest:
Interest on long-term debt 6,670 7,004 13,541 14,087
Other interest 1,912 2,229 3,331 3,971
Allowance for borrowed funds used during
construction - credit (155) (100) (291) (216)
-------- -------- -------- --------
Total interest 8,427 9,133 16,581 17,842
-------- -------- -------- --------
Net income $ 9,612 $ 10,353 $ 21,423 $ 23,989
======== ======== ======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $197,139 $166,803 $201,156 $165,936
Net income 9,612 10,353 21,423 23,989
Dividends declared on cumulative
preferred stock (240) (779) (480) (1,557)
Dividends declared on common stock (9,593) (4,796) (25,181) (16,787)
-------- -------- -------- --------
Retained earnings at end of period $196,918 $171,581 $196,918 $171,581
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
Per share data is not relevant because the Company's common stock is wholly
owned by New England Electric System.
</TABLE>
<PAGE>
<TABLE> MASSACHUSETTS ELECTRIC COMPANY
Statements of Income
Twelve Months Ended June 30
(Unaudited)
<CAPTION>
1998 1997
---- ----
(In Thousands)
<S> <C> <C>
Operating revenue $1,607,628 $1,564,299
---------- ----------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 1,096,620 1,131,008
Other operation 246,068 210,141
Maintenance 37,950 32,109
Depreciation 55,312 48,358
Taxes, other than income taxes 31,167 30,990
Income taxes 41,427 30,264
---------- ----------
Total operating expenses 1,508,544 1,482,870
---------- ----------
Operating income 99,084 81,429
Other income (expense), net (2,756) (1,243)
---------- ----------
Operating and other income 96,328 80,186
---------- ----------
Interest:
Interest on long-term debt 27,066 27,715
Other interest 6,574 7,238
Allowance for borrowed funds used during
construction - credit (504) (492)
---------- ----------
Total interest 33,136 34,461
---------- ----------
Net income $ 63,192 $ 45,725
========== ==========
Statements of Retained Earnings
Retained earnings at beginning of period $ 171,581 $ 154,150
Net income 63,192 45,725
Dividends declared on cumulative preferred stock (1,744) (3,114)
Dividends declared on common stock (32,375) (25,180)
Premium on redemption of preferred stock (3,736) -
---------- ----------
Retained earnings at end of period $ 196,918 $ 171,581
========== ==========
The accompanying notes are an integral part of these financial statements.
Per share data is not relevant because the Company's common stock is wholly
owned by New England Electric System.
</TABLE>
<PAGE>
<TABLE> MASSACHUSETTS ELECTRIC COMPANY
Balance Sheets
(Unaudited)
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $1,606,290 $1,579,309
Less accumulated provisions for depreciation 484,722 465,796
---------- ----------
1,121,568 1,113,513
Construction work in progress 17,756 13,363
---------- ----------
Net utility plant 1,139,324 1,126,876
---------- ----------
Current assets:
Cash 5,283 6,743
Accounts receivable:
From sales and deliveries of electric energy 171,523 158,627
Other (including $4,474,000 and $1,321,000
from affiliates) 5,184 2,112
Less reserves for doubtful accounts 14,289 12,808
---------- ----------
162,418 147,931
Unbilled revenues 54,175 49,513
Materials and supplies, at average cost 9,336 9,599
Prepaid and other current assets 17,085 22,255
---------- ----------
Total current assets 248,297 236,041
---------- ----------
Deferred charges and other assets 43,444 45,450
---------- ----------
$1,431,065 $1,408,367
========== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $25 per share, authorized
and outstanding 2,398,111 shares $ 59,953 $ 59,953
Premiums on capital stocks 45,945 45,945
Other paid-in capital 193,469 193,224
Retained earnings 196,918 201,156
Unrealized gain on securities, net 209 129
---------- ----------
Total common equity 496,494 500,407
Cumulative preferred stock 15,739 15,739
Long-term debt 343,398 338,387
---------- ----------
Total capitalization 855,631 854,533
---------- ----------
Current liabilities:
Long-term debt due in one year 10,000 20,000
Short-term debt (including $11,725,000 and $4,800,000
to affiliates) 35,475 34,700
Accounts payable (including $179,853,000 and $179,211,000
to affiliates) 213,634 195,023
Accrued liabilities:
Taxes 3,851 8,275
Interest 8,362 9,183
Other accrued expenses 30,377 22,081
Customer deposits 4,562 4,487
Dividends payable 9,832 5,036
---------- ----------
Total current liabilities 316,093 298,785
---------- ----------
Deferred federal and state income taxes 182,498 179,474
Unamortized investment tax credits 14,920 15,463
Other reserves and deferred credits 61,923 60,112
---------- ----------
$1,431,065 $1,408,367
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE> MASSACHUSETTS ELECTRIC COMPANY
Statements of Cash Flows
Six Months Ended June 30
(Unaudited)
<CAPTION> 1998 1997
---- ----
(In Thousands)
<S> <C <C>
Operating Activities:
Net income $ 21,423 $ 23,989
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 30,694 25,076
Deferred income taxes and investment tax credits, net 3,121 (7,710)
Allowance for funds used during construction (291) (216)
Decrease (increase) in accounts receivable, net
and unbilled revenues (19,149) 18,426
Decrease (increase) in materials and supplies 263 (211)
Decrease (increase) in prepaid and other current assets5,170 (548)
Increase (decrease) in accounts payable 18,611 (3,461)
Increase (decrease) in other current liabilities 3,126 24,157
Other, net 5,451 13,036
-------- --------
Net cash provided by operating activities $ 68,419 $ 92,538
-------- --------
Investing Activities:
Plant expenditures, excluding allowance for
funds used during construction $(42,919) $(44,007)
Other investing activities (2,115) (332)
-------- --------
Net cash used in investing activities $(45,034) $(44,339)
-------- --------
Financing Activities:
Capital contributions from parent $ 245 $ -
Dividends paid on common stock (20,385) (19,185)
Dividends paid on preferred stock (480) (1,557)
Changes in short-term debt 775 (13,650)
Long-term debt - issues 25,000 -
Long-term debt - retirements (30,000) (15,000)
-------- --------
Net cash used in financing activities $(24,845) $(49,392)
-------- --------
Net decrease in cash and cash equivalents $ (1,460) $ (1,193)
Cash and cash equivalents at beginning of period 6,743 2,356
-------- --------
Cash and cash equivalents at end of period $ 5,283 $ 1,163
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Note A - Hazardous Waste
- ------------------------
The Federal Comprehensive Environmental Response, Compensation
and Liability Act, more commonly known as the "Superfund" law,
imposes strict, joint and several liability, regardless of fault,
for remediation of property contaminated with hazardous substances.
A number of states, including Massachusetts, have enacted similar
laws.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. Massachusetts Electric Company (the
Company) currently has in place an internal environmental audit
program and an external waste disposal vendor audit and
qualification program intended to enhance compliance with existing
federal, state, and local requirements regarding the handling of
potentially hazardous products and by-products.
The Company has been named as a potentially responsible party
(PRP) by either the United States Environmental Protection Agency
or the Massachusetts Department of Environmental Protection for 16
sites at which hazardous waste is alleged to have been disposed.
Private parties have also contacted or initiated legal proceedings
against the Company regarding hazardous waste cleanup. The most
prevalent types of hazardous waste sites with which the Company has
been associated are manufactured gas locations. (Until the early
1970s, New England Electric System (NEES) was a combined electric
and gas holding company system.) The Company is aware of
approximately 35 such manufactured gas locations in Massachusetts.
The Company has been identified as a PRP at eight of these
manufactured gas locations, which are included in the 16 PRP sites
discussed above. The Company is engaged in various phases of
investigation and remediation work at 17 of the manufactured gas
locations. The Company is currently aware of other possible
hazardous waste sites, and may in the future become aware of
additional sites, that it may be held responsible for remediating.
In 1993, the Massachusetts Department of Public Utilities
approved a settlement agreement regarding the rate recovery of
remediation costs of former manufactured gas sites and certain
other hazardous waste sites located in Massachusetts. Under that
agreement, qualified remedial costs related to these sites are paid
out of a special fund established on the Company's books. The
Company made an initial $30 million contribution to the fund.
<PAGE>
Rate-recoverable contributions of $3 million, adjusted since 1993
for inflation, are added annually to the fund along with interest
and any recoveries from insurance carriers and other third parties.
At June 30, 1998, the fund had a balance of $47 million.
Predicting the potential costs to investigate and remediate
hazardous waste sites continues to be difficult. There are also
significant uncertainties as to the portion, if any, of the
investigation and remediation costs of any particular hazardous
waste site that may ultimately be borne by the Company. The NEES
companies have recovered amounts from certain insurers and other
third parties, and, where appropriate, the Company intends to seek
recovery from other insurers and from other PRPs, but it is
uncertain whether, and to what extent, such efforts will be
successful. At June 30, 1998, the Company had total reserves for
environmental response costs of $48 million. This represents an
increase from the $35 million balance at the end of 1997. Since
all of the sites for which increased reserves were recognized are
covered by rate agreements, this increase in the reserves did not
have an adverse effect on net income. The Company believes that
hazardous waste liabilities for all sites of which it is aware, and
which are not covered by a rate agreement, are not material to its
financial position.
Note B - Comprehensive Income
- -----------------------------
In the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive
Income (FAS 130). FAS 130 establishes standards for reporting
comprehensive income and its components. Comprehensive income for
the period is equal to net income plus "other comprehensive
income," which, for the Company, consists of the change in
unrealized holding gains on available-for-sale securities during
the period. Other comprehensive income was immaterial for the
Company for the quarters and six month periods ended June 30, 1998
and 1997, respectively.
Note C - New Accounting Standards
- ---------------------------------
In 1997, the Financial Accounting Standards Board (FASB)
released Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information
(FAS 131), which goes into effect in 1998. FAS 131 requires the
<PAGE>
reporting in financial statements of certain new additional
information about operating segments of a business. Application of
FAS 131 is not required for interim reporting in the initial year
of application. The Company is currently evaluating the impact
that FAS 131 will have on its future reporting requirements.
In February 1998, the FASB issued Statement of Financial
Accounting Standards No. 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits (FAS 132), which revises
disclosure requirements for pension and other postretirement
benefits. The Company will adopt FAS 132 in its financial
statements for the year ending December 31, 1998.
The adoption of FAS 131 and FAS 132 will have no impact on the
Company's operating results, financial position, or cash flows.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities (FAS 133), which establishes accounting and
reporting standards for such items. FAS 133 is effective for
fiscal years beginning after June 15, 1999. Currently, the Company
has no such derivative holdings.
Note D
- ------
In the opinion of the Company, these statements reflect all
adjustments (which include normal recurring adjustments) necessary
for a fair statement of the results of its operations for the
periods presented and should be considered in conjunction with the
notes to the financial statements in the Company's 1997 Annual
Report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------------
This section contains management's assessment of Massachusetts
Electric Company's (the Company) financial condition and the
principal factors having an impact on the results of operations.
This discussion should be read in conjunction with the Company's
financial statements and footnotes and the 1997 Annual Report on
Form 10-K.
Earnings
- --------
Net income for the second quarter and first six months of 1998
decreased by $0.7 million and $2.6 million, respectively, as
compared to the corresponding periods in 1997. Although the
Company implemented a rate increase in March 1998, this increase
was offset by revenue reductions related to the recovery of
purchased power and transmission costs greater than the reductions
in the related costs. These revenue reductions reflect the
implementation of fully reconciling purchased power and
transmission cost rate mechanisms in 1998 as well as a retroactive
purchased power billing adjustment from New England Power Company
(NEP) in the first quarter of 1998. The year-to-date decrease also
reflects a reduction in kilowatthour (kWh) deliveries.
This report contains statements that may be considered forward
looking as defined under the securities laws. Actual results may
differ materially for reasons discussed in the "Industry
Restructuring" sections of the Company's Form 10-K for 1997 and the
Company's 1997 Annual Report.
Industry Restructuring
- ----------------------
For a full discussion of industry restructuring activities in
Massachusetts, Rhode Island, and New Hampshire, stranded cost
recovery, the New England Electric System (NEES) companies'
proposed divestiture of its nonnuclear generating business,
accounting implications of industry restructuring and divestiture,
workforce reductions, and the impact of industry restructuring on
the distribution business, see the "Industry Restructuring" section
in the Company's Form 10-K for 1997 and the Company's 1997 Annual
Report.
<PAGE>
Divestiture of Generating Business
NEES has received all state and federal regulatory approvals
required for the sale of its nonnuclear generating business to
USGen New England, Inc. (USGen). USGen is awaiting final Federal
Energy Regulatory Commission (FERC) approval for exempt wholesale
generator status for the facilities it is purchasing. The proposed
sale is more fully described in the Company's Form 10-K for 1997
and the Company's 1997 Annual Report. Closing of the sale is
expected in the third quarter of 1998.
Risk Factors
While the Company believes that the industry restructuring
settlement and the sale agreement with USGen and other developments
constitute substantial progress in reducing the impacts associated
with industry restructuring, significant risks remain. These
include, but are not limited to: (i) the potential that ultimately
the Massachusetts Settlement will not be implemented in the manner
anticipated by the Company, (ii) the possibility that a voter
referendum in November 1998 could overturn the Massachusetts
legislation, followed by materially adverse legislative or
regulatory actions, (iii) the possibility of federal legislation
that would increase the risk to investors above those contained in
the Massachusetts Settlement and statute, and (iv) the failure of
NEP and The Narragansett Electric Company to complete the sale of
the nonnuclear generating business to USGen. The major factors
affecting the Company relate to the possibility of adverse
regulatory or judicial decisions or legislation which limit the
level of revenues the Company is allowed to charge for its services
or affect the costs the Company incurs.
Year 2000 Computer Issues
- -------------------------
For a full discussion of the Company's Year 2000 computer
issues, including a description of the modification process,
timeline, and estimated total costs, refer to the "Financial
Review" section of the Company's 1997 Annual Report, filed in
conjunction with the Company's Form 10-K for 1997.
<PAGE>
Operating Revenue
- -----------------
The following table summarizes the changes in operating revenue:
Increase (Decrease) in Operating Revenue
Second Quarter Six Months
-------------- ------------
1998 vs 1997 1998 vs 1997
-------------- ------------
(In Millions)
Purchased power and
transmission-related $(22) $(38)
1997 Purchased power cost
adjustment (PPCA) mechanism 4 10
Distribution rate increase 11 15
Deliveries to ultimate customers
and other - (3)
---- ----
$ (7) $(16)
==== ====
Historically, the Company purchased all of its electrical
requirements from NEP under the provisions of an all-requirements
contract at NEP's standard resale rate. Effective March 1, 1998,
the contract was amended, terminating the all-requirements
provision of the contract. The Company's customers also gained the
right to choose their power supplier. NEP continues to supply
power to the Company, at new lower rates, for customers who choose
to continue to take power from the Company. All customers pay
rates that include contract termination charges due NEP for its
generation-related stranded costs. Commencing in March 1998, the
revenues that the Company is billing to its customers related to
NEP's costs are all subject to true-up mechanisms based on NEP's
actual billings. Prior to March, only the fuel component of
purchased power expense was subject to a similar fully reconciling
true-up mechanism. The remainder of purchased power expense had
previously been subject to a partial PPCA true-up mechanism.
The Massachusetts Settlement provided for the end of the
Company's PPCA mechanism in 1996. Prior to FERC approval, which
occurred in the fourth quarter of 1997, PPCA refund provisions
continued to be accrued. In the second quarter and first six
months of 1997, approximately $4 million and $10 million,
respectively, of such refund provisions were accrued, and were
<PAGE>
subsequently reversed in the fourth quarter of 1997.
In March 1998, the Company also put into effect a $45 million
rate increase. This increase reflects changes to the distribution
cost of service that include an $11 million increase in annual
depreciation expense, a $3 million annual contribution to a storm
fund, and increased amortization of unfunded deferred income taxes
of approximately $1 million per year over six years.
The year-to-date decrease in revenues related to kWh deliveries
to ultimate customers reflects a decrease of 0.8 percent in kWh
deliveries, primarily due to milder winter weather in the first
quarter of 1998 as compared to the corresponding period in 1997.
Operating Expenses
- ------------------
The following table summarizes the changes in operating expenses:
Increase (Decrease) in Operating Expenses
Second Quarter Six Months
-------------- ------------
1998 vs 1997 1998 vs 1997
-------------- ------------
(In Millions)
Purchased power and operation
and maintenance:
Purchased power and
transmission costs $(14) $(20)
Other 3 1
Depreciation 4 6
Taxes - (1)
---- ----
$ (6) $(14)
==== ====
As noted above, effective March 1, 1998, NEP's billings to the
Company were significantly changed in connection with the
restructuring of the electric utility industry in Massachusetts.
Not only were NEP's rates reduced but the transmission portion of
NEP's costs are now billed separately and recorded in operation and
maintenance expense instead of as a component of purchased power
<PAGE>
expense. Partially offsetting these decreases in expense was a
retroactive billing by NEP in February 1998 related to certain
meter reading corrections which increased purchased power expense
by approximately $2 million.
The increase in other operation and maintenance expense
primarily reflects increased distribution-related and general and
administrative expenses, partially offset by lower charges to
postretirement benefits other than pensions expense.
The increase in depreciation expense primarily reflects a
portion of the $11 million increase in annual depreciation expense
provided for in the Massachusetts industry restructuring
settlement, and depreciation expense on new utility plant
expenditures.
Utility Plant Expenditures and Financing
- ----------------------------------------
Cash expenditures for utility plant totaled $43 million for the
first six months of 1998. The funds necessary for utility plant
expenditures during the period were primarily provided by net cash
from operating activities, after the payment of dividends.
In the first six months of 1998, the Company issued $25
million of long-term debt, retired $30 million of mortgage bonds
and increased its short-term debt outstanding by $1 million. The
Company plans to issue an additional $30 million of long-term debt
by the end of 1998 to refinance maturing bonds and to fund capital
expenditures.
At June 30, 1998, the Company had $35 million of short-term
debt outstanding, including $24 million of commercial paper
borrowings. At June 30, 1998, the Company had lines of credit with
banks totaling $65 million which are available to provide liquidity
support and for other corporate purposes. There were no borrowings
under these lines of credit at June 30, 1998.
For the twelve-month period ended June 30, 1998, the ratio of
earnings to fixed charges was 4.08.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The Company is filing the following revised exhibit for
incorporation by reference into its registration statement on Form
S-3, Commission File No. 33-59145.
12 Statement re computation of ratios
The Company is filing Financial Data Schedules.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report on Form 10-Q for
the quarter ended June 30, 1998 to be signed on its behalf by the
undersigned thereunto duly authorized.
MASSACHUSETTS ELECTRIC COMPANY
s/John G. Cochrane
John G. Cochrane, Treasurer,
Authorized Officer, and
Principal Financial Officer
Date: August 7, 1998
Exhibit Index
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
27 Financial Data Schedule Filed herewith
<PAGE>
<TABLE>
MASSACHUSETTS ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
June 30, 1998 Years Ended December 31,
Actual ----------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Income $ 63,192 $ 65,758 $37,926 $29,101 $34,726 $23,779
- ----------
Add income taxes and fixed charges
- ----------------------------------
Current federal income taxes 24,327 34,244 25,867 9,437 (6,762) 5,606
Deferred federal income taxes 9,773 912 (6,052) 6,156 24,932 3,430
Investment tax credits - net (1,095) (1,103) (1,118) (1,132) (1,228) (1,228)
Massachusetts franchise tax 7,566 7,514 4,479 3,935 4,681 3,348
Interest on long-term debt 27,066 27,612 27,089 25,901 20,967 23,403
Interest on short-term debt and other6,574 7,214 6,473 6,784 6,366 3,638
-------- -------- ------- ------- ------- -------
Net earnings available for fixed charges $137,403 $142,151 $94,664 $80,182 $83,682 $61,976
-------- -------- ------- ------- ------- -------
Fixed charges:
Interest on long-term debt $ 27,066 $ 27,612 $27,089 $25,901 $20,967 $23,403
Interest on short-term debt and other6,574 7,214 6,473 6,784 6,366 3,638
-------- -------- ------- ------- ------- -------
Total fixed charges $ 33,640 $ 34,826 $33,562 $32,685 $27,333 $27,041
======== ======== ======= ======= ======= =======
Ratio of earnings to fixed charges 4.08 4.08 2.82 2.45 3.06 2.29
- ----------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED
EARNINGS AND CASH FLOWS OF MASSACHUSETTS ELECTRIC COMPANY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,139,324
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 248,297
<TOTAL-DEFERRED-CHARGES> 43,444 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,431,065
<COMMON> 59,953
<CAPITAL-SURPLUS-PAID-IN> 239,414
<RETAINED-EARNINGS> 196,918
<TOTAL-COMMON-STOCKHOLDERS-EQ> 496,494 <F3>
0
15,739
<LONG-TERM-DEBT-NET> 343,398
<SHORT-TERM-NOTES> 11,725
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 23,750
<LONG-TERM-DEBT-CURRENT-PORT> 10,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 529,959
<TOT-CAPITALIZATION-AND-LIAB> 1,431,065
<GROSS-OPERATING-REVENUE> 758,603
<INCOME-TAX-EXPENSE> 14,029
<OTHER-OPERATING-EXPENSES> 703,243
<TOTAL-OPERATING-EXPENSES> 717,272
<OPERATING-INCOME-LOSS> 41,331
<OTHER-INCOME-NET> (3,327)
<INCOME-BEFORE-INTEREST-EXPEN> 38,004
<TOTAL-INTEREST-EXPENSE> 16,581
<NET-INCOME> 21,423
480
<EARNINGS-AVAILABLE-FOR-COMM> 20,943
<COMMON-STOCK-DIVIDENDS> 25,181
<TOTAL-INTEREST-ON-BONDS> 13,541
<CASH-FLOW-OPERATIONS> 68,419
<EPS-PRIMARY> 0 <F2>
<EPS-DILUTED> 0 <F2>
<FN>
<F1> Total deferred charges includes other assets.
<F2> Per share data is not relevant because the Company's common stock is
wholly-owned by New England Electric System.
<F3> Total common stockholders equity includes the unrealized gain on
securities.
</FN>
